Many important biological processes are regulated by protein tyrosyl phosphorylation. Tyrosyl phosphorylation, in turn, is controlled by protein-tyrosine kinases (PTKs) and protein-tyrosine phosphatascs (PTPs). Abnormal regulation of these pathways can lead to developmental defects and diseases such as cancer. A complete understanding of cellular regulation by tyrosyl phosphorylation requires defining the PTKs and PTPs involved and determining how they interact. Such understanding may lead to the development of" new drugs that selectively target elements of these signaling pathways, agents that may be useful for the treatment of human disease. The goal of this research program is to further define the biological function and mechanism of action of the SH2 domain-containing PTP, Shp2. Shp2 is required lbr normal vertebrate development, and is an essential positive (i.e., signal-enhancing) component of multiple important signaling pathways, including those regulated by growth factors and extracellular matrix. Recent work indicates that autosomal dominant mutations of Shp2 are the cause of the human genetic disease Noonan syndrome (NS), and may play a role in the genesis of certain myeloid leukemias. In work during this funding period, we determined the phenotype of Shp2 protein-null embryos, generated the first dominant activating mutations of Shp2 and assessed their effects on early Xenopus development, showed that tyrosyl phosphorylation is critical for Shp2 function in some, but not all, growth factor signaling pathways, and found that Src is a key target fbr Shp2 regulation, most likely because Shp2 directly dephosphorylates the Csk regulator, Pag/Cbp. Nevertheless, several key questions about Shp2 function and mechanism of action remain, and are the topic of this continuation application. We will directly assess the biochemical properties of known NS mutations, determine whether somatic activating mutations of Shp2 occur in human lung and breast carcinomas, and analyze the effects of NS mutations in the mouse. We will clarify, the mechanism by which tyrosyl phosphorylation of Shp2 affects receptor tyrosine kinase signaling. The detailed mechanism by which Shp2 regulates Src activity via Pag/Cbp, and whether other Src family kinases are regulated similarly will be determined. Finally, we will determine how/whether defective Src activation contributes to the phenotype of Shp2-deficient cells, specifically, defective Ras/Erk activation and enhanced Rho activity. The results of our studies should yield new insights into the regulation of tyrosyl phosphorylation and the mechanism by which Shp2 mutations cause NS, and may reveal Shp2 to be a novel target for therapeutic intervention in human cancer.